The effect of real exchange rate volatility on youth unemployment in Turkey

This study focuses on the relationship between real exchange rate volatility and youth unemployment during the period 2005.01-2021.12 in Turkey. Altough it was that unemployment rates reached high levels in terms of economy after the volatility in the exchange rate during the said period, considering the number of studies in the literatüre, it was noticed that there was not enough study on this subject. ARCH(1), GARCH(1,1), TARCH(1,1), EGARCH(1,1) were established for the estimation exchange rate volatility throughout the period under consideration, and EGARCH(1,1) was the most suitable model these models according to various criteria. According to the results obtained from this model, it was observed that a major shock in the exchange rate was temporary and was halved after approximately 35 days. After estimating the volatility, the existence of a cointegrating relationship between youth unemployment and exchange rate volatility Peseran et al. (2001) using the ARDL limit test. The general result of this study is that there is no cointegration relationship between youth unemployment and real exchange rate volatility in the mentioned period. After determining that there is no long-term relationship between the variables, the existence of a cause-effect relationship between real exchange rate volatility and youth unemployment was investigated. According to the results of the Pairwise Granger casualilty test, it was found that there unidirectinaol Granger causality relationship from real exchange rate volatility to youth unemployment.